South Asian Insider
Outcome Health CEO Rishi Shah stepping down as part of settlement with investors
(By Our Staff Reporter) Out tcome Health struck a deal with its investors to settle allegations of fraud and end a monthslong and very public legal battle. CEO Rishi Shah and President Shradha Agarwal have stepped down from day-to-day management of the company to become chairman and vice chair of the board of directors, which will search for a new CEO, according to a news release from the company. The newly expanded board will also include three new independent directors and two investor representatives.
The agreement settles all litigation between the company and its investors, according to the news release. Shah and Agarwal also plan to join investors and lenders in investing another $159 million into the business, $77 million of which will be used to pay down debt, according to the news release.“Shradha and I look forward to inviting in an operating leader who has the experience and skills required for the future success of Outcome Health,” Shah said in a statement. “We’re enthusiastic to move into this new chapter of growth with our customers and partners to transform the health care industry and fulfill our mission to activate the best health outcomes possible for every person in the world.”
Founded in 2006 as ContextMedia, the company places screens in doctor’s offices that run educational content about health topics and advertisements from drug companies. It had not raised outside money until last year, when it secured $487.5 million in funding from big-name investors and rose to a valuation of about $5.5 billion.
In November, those investors — including units of Goldman Sachs and Google, and a fund co-founded by Illinois gubernatorial candidate J.B. Pritzker — sued the company, Shah and Agarwal, alleging Outcome Health misled advertisers and investors about the company’s performance.
The investors filed court documents indicating they received subpoenas from the Justice Department.
In recent months, pharmaceutical advertisers have pulled tens of millions of dollars in ads from the fast-growing company, and hospitals have backed away. More than one-third of Outcome Health’s 535 employees took a voluntary buyout, and it called off a headquarters move.
Earlier this month, Illinois suspended two tax credit agreements with the company.
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